Hoteles City Express SAB de CV

BMV:HCITY

Earnings Call Transcript 2022-Q3

[Operator]

Good morning, and welcome to the Hoteles City Express' Third Quarter 2022 Earnings Conference Call. Thank you for joining us today. [Operator Instructions] Please note, this event is being recorded.

For opening remarks and introductions, I would like to turn the call over to Héctor Vázquez, Investor Relations Director from Hoteles City Express. Please go ahead.

[Héctor Montoya, executive]

Thank you, and good morning, everyone. Yesterday, we were pleased and excited to announce Hoteles City new strategic relationship with Marriott and the sale of our 5 brands to them. Also, after the market closed, we released our third quarter 2022 results.

With regards to the transaction, we posted the following documents on our Hoteles City Investor Relations website: a press release, prospectus, the information memorandum and an investor presentation. Also, as usual, we posted our third quarter's earnings results.

We want to remind you that during this call, management comments may include forward-looking statements. We ask that you please refer to a legal disclaimer in the quarterly reports for guidance on this matter.

Joining us today's call is Mr. Luis Barrios, our CEO; and Mr. Santiago Gutierrez, our CFO. Luis will begin with some opening remarks, followed by Santiago, who will present the company's financial results. We will then open the floor for questions.

Now it's my pleasure to turn the call over to Luis.

[Luis Eduardo Barrios Sánchez, executive]

Good morning, everyone, and thank you for joining us today. We are very excited to discuss another quarter with positive results. However, before we go over the results, I would like to first talk about the transaction with Marriott, which represents a unique opportunity for Hoteles City and which I believe is a great value to our shareholders.

We have been working with Marriott team for nearly a year to develop a strategic relationship, which we were very pleased to announce to our investors and the public yesterday. I will give you an overview of the transaction and the exceptional strategic value it offers to Hoteles City. Later in the call, Santiago will go over the mechanics of the deal, and we'll both be happy to take your questions during the Q&A session. Also, I encourage you to look at the documents we have uploaded to our Investor Relations website.

Before we go into the details, I would like to mention that when we started City Express back in 2002, we were convinced that a modern, efficient and affordable brand would be very attractive to local travelers. During these first years, 20 years, we've built a brand that has grown to become one of the largest and most recognized in the hospitality industry in Mexico. In fact, we have been recognized with the Markantoria distinction from The Instituto Mexicano de Contadores Públicos.

We are very excited and honored to be working alongside Marriott in this strategic relationship that will enable us to unlock even more value for our brands. Marriott, a leading global hotel franchisor and a brand synonymous with top quality has to its action recognize the value of our business models, commitment to quality standards, internal policies and potential for expansion. The strategic relationship with Marriott includes the sale of our 5 Hoteles City brands associated trademarks and related intellectual property, the City Premios loyalty program as well as other assets and liabilities related to the brands to Marriott for an equivalent of $100 million.

The 5 brand names will be changed with Marriott's endorsement to each have by Marriott at the end of their name, which will also be included in the logo. In addition, the process from the transaction, net of applicable taxes and transaction costs will allow Hoteles City to strengthen its balance sheet by reducing leverage, enhancing liquidity, allowing the company to invest in maintenance CapEx and to reactivate several projects that were paused due to the COVID-19 pandemic.

The liquidity provided by this transaction will eliminate the need to raise additional capital and will give the company the opportunity to negotiate better terms and conditions in existing syndicated loan. Hoteles City currently holds 144.5 million shares in the company's treasury, raised an issue during 2021 capital increase, which we intend to cancel upon completion of the transaction. As part of this transaction, Marriott will acquire the franchise agreements for the 152 hotels and will provide the distribution platform and commercial programs worldwide.

It is worth noting that all leased and wholly owned hotels will enter into long-term franchise agreements with Marriott, while all franchise contracts of co-invested franchise and managed properties will be assigned to Marriott and given the opportunity to the owners or franchisees to sign a new agreement.

Hoteles City's corporate and management structures will be left as they are, and the company will retain its management agreements, development activities and hotel ownership. The most meaningful changes are that going forward, Marriott will be receiving the franchise fees instead of Hoteles City's OpCo and will provide distribution and reservation services. As part of this relationship, both parties expect to work towards expanding the presence and strengthening the distribution of the City Express brands.

Operadora de Hoteles City Express will become an approved operator, developer, project manager and construction supervisor in LatAm and the Caribbean for future properties with respect to the City Express brands and other Marriott select services brands.

We would like to highlight as of the date of the announcement, and the premarket opening that $100 million that Hoteles will receive from the transaction is equivalent to 109% of the company's then market cap. Meanwhile, the franchise business sold to Marriott represents 18% of Hoteles City's total EBITDA. We expect that Hoteles City will recover the sold EBITDA within less than 2 years through the realization of expected cost synergies, expected industry recovery and the opening of new projects.

Furthermore, the strategic relationship with Marriott will strengthen Hoteles City's future growth opportunities in Mexico, the Caribbean and LatAm and opens a possibility to grow in other markets as well. The company will retain its full optionality with respect to its wholly owned hotel portfolio, including the potential to launch the FSTAY vehicle when the macro and capital market conditions become more favorable. The closing of the transaction is subject to standard conditions, including approval by COFECE’. We estimate that the transaction will close between the end of '22 and the mid-2023.

In conclusion, this transaction allows Hoteles City to monetize an intangible asset we have built over time at a compelling value and tactical value in terms of growth and gives us scale to partnering with one of the largest hotel companies in the industry, all while supporting a healthier balance sheet. We believe that this transaction is a strategic win for Hoteles City as well as for our customers, shareholders and partners.

As I mentioned, before, it will create awareness with international travelers, particularly those in the U.S. We are excited by what we see ahead for the company with the announcement of this relationship and look forward to sharing the benefits, all our shareholders and other stakeholders. Needless to say that we are honored to work with Marriott in this venture.

Now looking to the results. We were very pleased with the third quarter numbers. Total revenue was MXN 845 million, up 32.6% compared to the same quarter of last year. Additionally, RevPAR was up 40.7% quarter-over-quarter. Hoteles City Express has continued to demonstrate its resilience and be recognized as a reliable and trusted brand by business and leisure travelers. Inflation has steadily increasing and central banks have tightened monetary policy and increased rates. In response, we increased our rates in the third quarter and continue to implement cost containment strategies to reduce the effect of inflation on our bottom line.

These actions included negotiating with suppliers and reducing fixed expenses without sacrificing quality and service. Despite these challenges, we observed a positive recovery in occupancy and rate levels in the quarter compared to the pre-pandemic 2019 period. In July, for example, occupancy reached a recovery rate of 89.6%, while August was 99.7% and September for the first time was higher than 2019 without 101.1% equivalent.

We have continued to see increased activity from business travelers resulting mainly from larger corporations returning to in-person work, leading to a pronounced recovery in metropolitan area hotels. Additionally, export corridors in both in the north of the country and the metropolitan areas have continued to show signs of recovery.

Leisure travelers continue to be an important segment of all of our brands. This can be observed in the improvement in weakened occupancy and rate levels. During this quarter, ADR was 5% higher on weekends than on weekdays. In the second half of the year, we also observed an improvement in occupancies in the regions that had been lagging in the beginning of the year, such as the Southeast, some metropolitan areas and the Bajío region. This was supported by nearshoring trends and our focus on new market segments to further diversify our portfolio and mitigate some slower recoveries. These improvements were all reflected in our operating and financial results.

Now I would like to hand the call over to our CFO, Santiago Parra, who will go into more detail on the transaction and third quarter results. Please, Santiago, help us on these.

[Santiago Parra, executive]

Thank you, Luis, and good morning, everyone. I'm pleased to provide you with more details on our new partnership with Marriott, which represents a turning point to unlock shareholder value, enhance our long-term growth strategy, create cost efficiencies together with incremental revenue and strengthen the balance sheet.

First of all, and as you all may know, the last 2 years have been challenging for Hoteles City strategy. 2021 was a key year for the refinancing of both short- and long-term debt, adjusting the company's capital structure, generating liquidity through our latest capital raise process and asset sales that helped us navigate to the most restrictive pace of the pandemic.

I would like to highlight that over the past 12 months, we've sold around MXN 837 million to continue with our liquidity strategy. We are satisfied with the results we have achieved so far and how we have positioned the company for the coming years by entering into this strategic relationship with Marriott. This transaction represents a unique opportunity that will provide Hoteles City with a wider scope of opportunity in other markets as well as bringing several benefits to the company while reinforcing our deleveraging efforts.

As an example, since December 2020, we lowered our net debt from MXN 5.4 billion to MXN 4.3 billion, which represents a decrease of 19.5%. Assuming the transaction had been completed by third quarter 2022, net debt would have decreased to MXN 3 billion, which would have represented a decrease of 44.7% when compared to December 2020, leading net debt to EBITDA to fall to 3.6x, a figure better than pre-pandemic levels at 4.5x in December 2019.

As Luis mentioned, Hoteles City will receive $100 million from Marriott in exchange for its 5 brands: City Express, City Express Plus, City Express Suites, City Express Junior and City Centro, its Premios loyalty program as well as other assets and liabilities related to the brands.

The use of proceeds after paying taxes and transaction costs tend to be as follows: $40 million will be used to repay a portion of our syndicated loan, which at third quarter 2022 would have been around $156 million. Considering this prepayment, our financial expenses should be reduced by around $4 million per annum and at the same time, would boost our free cash flow generation.

$28 million will remain in cash to strengthen our liquidity position and working capital needs and $11 million will be invested in maintenance CapEx to reactivate Plus projects that will help increase the company's EBITDA. In terms of valuation, the transaction will take place at 14x multiple on the net impact of the transaction to Hoteles City 2023 estimated stand-alone EBITDA, which is significantly accretive for shareholders, considering Hoteles City's current valuation.

We believe this transaction brings several benefits for Hoteles City shareholders for the short and long term. Hoteles City will be able to monetize value, which was not reflected previously in our balance sheet and has not been recognized in the current share price, while the monetization of intangible assets in current market conditions mitigate future economic risks.

Additionally, we expect synergies to plan an important role in boosting profits in the coming years as we leverage Marriott's relationship to decrease costs from vendors, travel agents, travel agent commissions and OTA fees, among others. Meanwhile, other benefits should come from our reduction in comprehensive financial costs, boosting our free cash flow generation.

Lastly, as Luis mentioned before, the liquidity provided by this transaction will eliminate the need for the company to raise additional capital and will give the company the opportunity to negotiate better terms and conditions on its existing syndicated loan. All in all, we believe this will support the company's growth expansion and reflects the company's commitments to its shareholders.

Moving on to the results from the quarter. My remarks will be based on Hoteles City Express' third quarter 2022 financial results, which were prepared under IFRS. We closed the quarter with a portfolio of 152 total hotels, which is 1 less hotel compared to the same quarter of last year. Of these, 144 were considered established properties, 11 more than in the second quarter of 2021. The chain operated a total of 17,356 rooms in the quarter, a 0.5% decrease year-over-year.

At the chain level, our ADR increased 8.5% year-over-year to MXN 1,133, and the occupancy rate increased 12.9 percentage points to reach 56% over the same period. With both factors combined, RevPAR increased 40.7% year-on-year, closing the quarter at MXN 641. The recovery of both business and travel leisure and leisure hotel activity as well as rates and demand recovery strategies have led to an increase in the change RevPAR. Importantly, in September, RevPAR was above 2019 levels with a 112.6% recovery. We believe the improvement in rates can continue during the second -- the rest of the year.

Revenues reached MXN 845.6 million for the quarter. This implies a 32.6% year-on-year increase. The positive trend in the recovery of occupancy and rate levels continue, and the company expects to uphold this growth. Total cost for the quarter increased 17.1% year-on-year to MXN 702.9 million, mainly due to the increase in occupancy and, therefore, in cost per occupied room night. Despite these factors, this increase was 15.5 percentage points lower than the increase in revenues. We have implemented and maintained a cost-containment strategy to reduce the effects of inflation throughout the year, which includes negotiation with suppliers and reducing fixed expenses.

The third quarter adjusted EBITDA was MXN 270.7 million, an increase of 69% year-on-year with a margin of 32%, 6.9 percentage points above the same quarter of last year. Our comprehensive financing results increased during the quarter to MXN 157 million compared to MXN 142.4 million reported in third quarter of '21. This was primarily due to higher interest payments on our bank obligations caused by interest rate increases. At the end of the quarter, 71.4% of our total debt was covered with a derivative instrument, capping the base rate over loans to a weighted average cost of 11.5%. As a result, MXN 3,726.4 million of our debt is hedged against interest rate increases.

Cash and cash equivalents increased to MXN 1,094 million. Financial liabilities decreased 12.5% from MXN 6,156.5 million at the end of third quarter '21 to MXN 5,387.3 million in third quarter '22. This was mainly due to cash inflows from the sale of our equity stakes in subsidiaries and the prepayments to the syndicated loan, bringing net debt to MXN 4,293.4 million. This represented a 1.6% quarter-on-quarter decrease in our net debt.

Our net loss for the quarter was MXN 16.2 million compared to the MXN 106.8 million loss reported for the same period of last year. This recovery was due to a combination of all the previously mentioned trends and efforts.

In summary, the new strategic relationship with Marriott, combined with improvements in hotel demand and cost containment efforts will help us face current market conditions. We look forward to continuing delivering on this front in the future.

Thank you for your attention. Operator, please go ahead and begin the Q&A portion of our call.

[Operator]

[Operator Instructions] Our first question is from Alejandra Obregon with Morgan Stanley.

[Alejandra Obregon, analyst]

Congratulations on the numbers and the transaction. I actually have 2 questions. The first one is on your results and the elasticities in your operations. From -- I guess, from a regional perspective, where do you see more opportunities to reduce the revenue per available room gap that you were talking versus 2019? I guess I would like to understand if it's in the Bajío region perhaps as it normalizes from the troubled auto space? Or do you see more upside on the nearshoring markets from current highs? So that will be my first question.

And then the second one, I guess, has to do with the transaction and some of the synergies that you mentioned earlier in the call. So if you can help us quantify those synergies? And how do you from a sales productivity and operational perspective, how do you see the Marriott platform adding to your existing platform in the future? If you can help us quantify a little bit of that.

[Luis Eduardo Barrios Sánchez, executive]

Thank you for your question, Alejandra. I will take the first part, and Santiago will take the cost -- the synergy side of the -- part of the question. Well, in essence, yes, we still have seen upside. The auto industry is beginning to show some signs, but there is still a long way to go, especially in places like Puebla and the Central Mexico, the Bajío, where most -- where there a lot of concentration in those in -- of hotels that cater that industry. In addition to it, there are many manufacturing concerns that going on the auto industry that definitely we see still an upside.

About the nearshoring, yes, we are beginning to see that nearshoring not only on the border line with the U.S. I would say that this nearshoring is on both sides of the border. As you know, that region is not here nor there, and it brings an opportunity for us.

Now we have begun to see the -- we have followed the warehousing dynamic in terms of construction and occupancy. And we have started to see also that investment arriving to another cities like Monterrey, which is traditional, but it's not necessarily on the border, but it is a very important manufacturing center.

We have begun to see increased -- an increased activity in construction as well as occupancy of the industrial and warehousing properties. And that is also flowing to certain portions in the center of the country. So we still will see an upside, and we should be reaching and going in, I will not say tomorrow, but in the coming months and at least 24 months at the most.

Coming back to the previous 2019 numbers. 2019 was not necessarily the best year. 2018 was much better. And you're talking of about 60 -- I would say 63% occupancy rates for -- that we experienced in previous time, 63% to 66%. So we still see a couple of points or several points above what we have delivered.

Needless to say that remember that in our sales mix, now we have more leisure traveler than we had before. So that is also a push that we have that should break the previous stabilization -- stabilized occupancy for the portfolio. So we have several new avenues to come, and that's the way I see it without any impact of what the relationship with Marriott could bring into the table for the exposure to the international travelers.

[Santiago Parra, executive]

Now in terms of your question regarding the synergies, well, mainly the synergies will come from a lower distribution costs like in the commission fees for travel agencies and online travel agencies and third parties. So basically, what we are seeing is savings on the distribution network. And then with the resources, as we mentioned, we're going to finish some of the hotels that we had previously paused during the pandemic.

And so when these hotels come into operation, we will have incremental EBITDA from these hotels. In addition, we're going to save some -- also, we're going to have some savings using the infrastructure and IT platforms that we have already in place, which we will continue using some of them while connecting to Marriott's infrastructure.

[Alejandra Obregon, analyst]

Understood. And have you measured the synergies? Do you have a number on top of your head at least for the first stage of the process that you can share?

[Santiago Parra, executive]

Well, the synergies will represent at a property basis around 1 to 1.5 increase in margins.

[Operator]

The next question is from Javier Gayol with GBM.

[Javier Gayol Zabalgoitia, analyst]

Luis, Santiago and Héctor, congratulations in closing the transaction with Marriott and on a strong quarter. I have a couple of questions, if I may? And the first one would be regarding the -- how do you guys see the potential for bringing new hotels into operations? I believe this transaction improves the value proposition of Hoteles City. So do you think that's an avenue that you're going to pursue in terms of growth, bringing new hotels into administration? That will be my first question.

And the second question is part of the use of proceeds. So you mentioned that you're going to use $11 million to finish some of the hotels. If you could bring -- if you could give us a little bit more color on how much have you invested on those hotels that are -- have been deferred construction? And what sort of results are you expecting from that revenues and EBITDA, are you expecting from those hotels?

And also in terms of your -- you guided that you're leaving something around MXN 30 million on the cash balance. Have you guys think -- have you guys thought about maybe using some of those proceeds towards share buybacks? That will be all for me.

[Luis Eduardo Barrios Sánchez, executive]

Sure. Thank you for your question. It is one question that has about 5 different answers. So we'll take it. Also here, we'll share Santiago some of the responses. As to the pipeline, yes, we have -- we still have 5 properties, which we somehow stopped construction during the pandemia, are in different stages. And some of those -- one of those is the City Express Guadalajara Providencia, which is a beautiful property, so City Express Plus, which we had invested almost 90% of the resources needed to put it into operation. So it's a merely 10%, roughly $1.5 million or so investment that we have to do.

So if you were to say that we also will reinstate the construction in the City Express Cancún Airport as well as the Monterrey property in -- another City Express Plus in Monterrey Centro, and we have almost finished the City Express Mérida Siglo XXI, which we are partnering there with a private investor.

So in total, we're talking those $11 million would generate -- would bring to operation around 600 rooms into place in the coming 12 months, probably by the end of the year of next year. So -- and we will start with Providencia starting in late January of 2023. So that is for the first question.

In addition, remember, we still have a quite nice figure invested in land bank. We have very good properties there, I mean, land and some of them have a little bit just started, all of them with permits and licenses that are ready to start. We want to be very selective, even though we will put this -- these are about 5 to 6 properties in that land bank that could start construction anytime. What we are trying is to play safe. We will put them in good shape and get the final permits, the ones that are lacking that and get ready for start at any moment. But we want to play it safe. We want to see how the market develops. There are elections, there is a shadow in the U.S. economy as well as Mexico in terms of some minor signs of recession. So we are going to play it safe. We're going to be very selective in starting and using our cash on that.

And that's why -- and that -- this doesn't mean that we will keep pushing joint ventures and investments from our base of investors that they are normally also seeking growth and investing in the cash -- the extra cash that they generate in their different businesses.

As to the purchase of shares, yes, we have it in mind, and we will take it as an option. And we also want to see how the news develops how the price trend. And we are not close to the idea, but we are not necessarily pushing it too hard. We want to play it safe and -- well, in poker, when you're playing poker is sometimes you pass on certain opportunities and not to take the risk of a surprise. We are coming out from a very difficult times. We have come -- we have overcome it. This is -- this was not an Excel play in stimulating the stress of the company just in the model. We lived through that, and we are resilient enough, we were resilient enough and reacted quick in order to survive without any help from the government.

So we are now in a stage in which we want to see how things develop. We're going to have a very healthy structure that gives us the flexibility to react immediately and reduce the level of risk in the company.

Within that are the uses, let's say, the nonoperating cash uses or sources. That means we can react immediately to reinvestment and accelerate the speeding growth. We have a -- we can react to stock purchase. We can react to the restructuring, which is the next thing that we will do. The restructuring of the debt with the banks in order to be able to have -- to reduce our net debt leverage as well as our interest cost, deferred payments for a long-term -- a longer term loan. So we have still things to do in order to be precise and give you a strategy or a fine definite path to follow in the next months.

What you will see us is restructuring. You will see us keep our liquidity. And you will see us analyzing the market as to which best strategy generates value in the short term. Definitely, we're focused on trying to get back our free cash flow as fast and as much as we can with that, I think this should send a signal to the market that now we have free cash flow for shareholders and shareholders' value.

Now I would turn the microphone to Santiago to explain.

[Santiago Parra, executive]

Just to clarify, Javier, that we have already -- I mean we made the disclosure in the report for the land bank and the value of the construction in process. The land back is approximately MXN 559.3 million, and the construction in progress accounts for MXN 1.4 billion.

[Javier Gayol Zabalgoitia, analyst]

And regarding the part of -- in terms of the strategy to bring in more hotels into your platform, is that a strategy that you guys are pursuing? Or are you more focused on the construction part of the business?

[Luis Eduardo Barrios Sánchez, executive]

No, we will do both. We will follow both strategies.

[Santiago Parra, executive]

And actually, we will work together with Marriott looking for new opportunities. As mentioned in the -- during the call and the press release, we're a preferred provider for...

[Luis Eduardo Barrios Sánchez, executive]

Yes, we qualified.

[Santiago Parra, executive]

Yes, sorry, qualified provider for operating construction, supervision and development. So we will work together with them once they identify new opportunities for the brand to grow either in Mexico or in the Latin American countries for further expansion.

[Luis Eduardo Barrios Sánchez, executive]

And on your question of the purchasing -- repurchasing shares, you're going to see today, we made a purchase of $4 million -- 4 million shares. But those are -- regardless those are -- we always do some purchasing. And this is mostly for -- in order to fund our stock option plan for senior management. So this is not a trend in order to do a large or some sort of rebuying shares at large quantities. It's just -- I would say, it's an operating purchase.

[Javier Gayol Zabalgoitia, analyst]

Okay. So -- and just to be very clear on the shares -- I'm sorry to taking up the call, but you're going to cancel 144 million shares. So you're going to lead the shares that remain in treasury are only -- are those used for the stock option plan? Or are you going to -- or are you buying more...

[Luis Eduardo Barrios Sánchez, executive]

No, we have an open strategy. I am not committing to anything. I'm just saying that the purchase that you saw today is for funding our stock option plan.

[Javier Gayol Zabalgoitia, analyst]

So you're canceling the -- once the transaction is completed, you do plan to cancel the 144 million shares initially...

[Luis Eduardo Barrios Sánchez, executive]

We have 144.5 million shares that have not been funded, and we have been in treasury. And we -- as we announced, by the time we close the transaction and get the phones from the sale of the brand, we will cancel those.

[Javier Gayol Zabalgoitia, analyst]

That's very help. Thank you and congratulations again.

[Operator]

[Operator Instructions] The next question is from Valentín Mendoza with Actinver.

[Valentín Mendoza Balderas, analyst]

Congratulations on the results and on the transaction. I just wanted to confirm, based on what you just commented regarding your expectations for delivering this over 600 additional rooms, is my understanding that the recovery of the EBITDA that you all will be, let's say, giving up with the transaction, should it come from the recovery of the overall portfolio, I mean, the lag performance in the Bajío region, considering the ramp-up of the upcoming hotels that you mentioned? Am I getting you right?

And then my second question would be on the synergies that Santiago just shared a target for 1% to 1.5%, an additional margin. Just wanted to get a target in time. When should we expect to see that flowing through your P&L?

[Santiago Parra, executive]

Valentín, thank you for the question. This is Santiago. So basically, what we are expecting is to get -- as we told -- as we explained in the call, synergies and cost efficiencies and then an improvement in cash flow. So basically, let me go back. So cost synergies will be at the property level because they will have distribution savings from travel agencies and OTAs, that this will come in when that transaction closes and when the properties have a franchise agreement with Marriott and therefore, these rates apply for the hotels, for the properties, okay?

Now in terms of the new rooms, the 670 rooms that Luis mentioned, those will bring fees for the operating company and the EBITDA for the PropCo once they're taking out from the construction in progress and they're put in operation. Those will come into production or they will be open once we receive the funds and we invest in those properties. So it will take some months after the closing.

Now in terms of the cash flow generation from the prepaying of the MXN 800 million that we have provided that figure to the syndicated loan, there will be less interest payments because we're going to have less debt. And with the cash that we're going to have in our balance sheet, we're going to have some interest gains for those. So I don't know if the question is answered.

[Luis Eduardo Barrios Sánchez, executive]

Yes. And just to clarify, Valentín, we're not taking into consideration any increase in rates, neither in occupancy in the figures that Santiago was mentioning. So just to be clear on that.

[Valentín Mendoza Balderas, analyst]

Okay. Got it. And just one final question. So I guess you're done with the asset sales, right?

[Santiago Parra, executive]

Sorry?

[Valentín Mendoza Balderas, analyst]

So I guess that you are done with the asset sales. You're not looking for selling anything out in your portfolio?

[Santiago Parra, executive]

Well, as we have mentioned, we'll see that as time goes by and as the opportunities come. But basically, yes, we -- as the market has recovered, we've seen some offers for some properties start to pick up. And at this point in time, we are not selling properties. We would have to analyze the land bank, for example. And given the relationship with Marriott and the new potential investors can be interested in them developing these properties. We could also analyze and sell them to specific investors that are interested in our land bank that we have already purchased from a strategic point of view.

[Luis Eduardo Barrios Sánchez, executive]

I would say that we will keep what we've been doing before. We are investors, developers and managers of property. And in that sense, we will continue to promote projects with our original brand of City Express and City Express by Marriott in the future after the closing, the same way that we've been performing before. So there is no change in the essence of the company. We will continue to grow. The only difference is that today, we will have a stronger distribution platform by the alliance. So it couldn't get any better.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Luis Barrios for any closing remarks.

[Luis Eduardo Barrios Sánchez, executive]

Well, thank you to everyone for joining us on today's call. We are expected -- we are excited about the opportunities brought by our strategic relationship with Marriott and the continued positive results during the third quarter of the year. We believe these trends should continue to benefit us and are looking forward to a strong finish to 2022. I want to reiterate, how grateful I am to all of our team that made this happen. We look forward to continue generating value for all our shareholders. In the meantime, please feel free to reach out if you have any questions or comments. We are always happy to talk with all of you. Thank you, operator.

[Operator]

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.